Dimon Jim Under Attack – Will He Keep Chairmanship?

JAMIE DIMON: If You Fire Me, I’ll Quit

JPMorgan Chase & Co Chairman and CEO Jamie Dimon said he may consider leaving the bank where he has held the top post since 2005, if shareholders vote to split his duties, the Wall Street Journal reported on Saturday.

Shareholders will vote later this month at an annual meeting in Tampa, Florida, on a non-binding proposal to separate the chairman and chief executive roles after a more than $6 billion trading loss last year raised questions about risk oversight.

At first, Dimon said he would not comment publicly on what he would do if the vote went against him, but when pressed he added that the worst-case scenario would be to leave the bank, the newspaper said, citing sources that attended a private meeting at the company’s New York headquarters.

Results of the vote will be announced on May 21, but it remains unclear what the board will do if the proposal passes.

Proxy advisory firms Institutional Investors Services and Glass Lewis & Co said that the losing “London Whale” derivatives trades that cost the bank $6.2 billion last year showed the board had failed in its oversight of JPMorgan executives. The firms also recommended that some board members not be re-elected.

Two ranking JPMorgan Chase directors issued a letter to shareholders on Friday, arguing against recommendations. The letter, signed by presiding director Lee Raymond and corporate governance and nominating committee chairman William Weldon, said the advisory firms focused too narrowly on the trading losses and that the changes would be disruptive and not in shareholders’ best interests.

A similar proposal to split the roles garnered the approval of 40 percent of shareholders last year.

JPMorgan Chairman Feels the Heat

Reckless trading in derivatives in 2012 and recent allegations of deliberate distortion of testimony to federal regulators are two reasons that the powerful Chairman and Chief Executive Officer of JPMorgan is under intense fire prior to the company annual meeting in two weeks.

Jamie Dimon was the magician who turned a sow’s ear into a silk purse. At a time when just about everyone blamed Wall Street for the 2008 financial collapse, Dimon became Washington’s favorite banker. His name was even floated for the secretary of the treasury position a few months ago. (Wall Street proxy Jack Lew filled the slot.)

Now, Dimon faces the humiliation of a real challenge to his role as JPMorgan’s Chairman and Chief Executive. Top investors are demanding that Dimon be assigned to either the Chairman or CEO role and that the board be restructured.

“JPMorgan Chase & Co has yet to convince three of its largest shareholders (BlackRock Inc., Vanguard Group Inc and Fidelity Investments) to support the company in an upcoming vote on whether Jamie Dimon should retain both his CEO and Chairman titles, the Wall Street Journal said.” Reuters, May 7

The Financial Times (May 7) reported that proxy voter firm Glass Lewis recommends the split roles as well. The firm wants six sitting members of the board ousted at the upcoming annual meeting in two weeks. CtW Investment Group, another proxy advisory firm echoed shares the Glass Lewis position.

Institutional investors are already talking about who can succeed Dimon and continuing the fight if the shareholders vote, underway, and the annual meeting fails to produce results.

The putative reasons for the split roles or dismissal effort supposedly comes from a lack of action on the London Whale credit default swaps trading affair in which reckless speculation in derivatives cost the bank billion dollars plus a great deal of good will.

A closer event that may be pushing this effort comes from the story of federal regulators investigating coal plant hyping by JPMorgan insider Blythe Masters (creator of credit default swaps). The New York Times said that a Federal Energy Regulatory Commission (FERC) claims that, among other things, Masters knew that subordinates lied to FERC investigators. This is a very grave charge. JPMorgan’s general regulatory problems

“Mr. Dimon acknowledged in a recent letter to shareholders that “unfortunately, we expect we will have more” enforcement actions in “the coming months.” He apologized for letting “our regulators down” and vowed to “do all the work necessary to complete the needed improvements.”

“Still, the broad regulatory scrutiny — at least eight federal agencies are investigating the bank — presents a threat to JPMorgan at a time when it is raking in record profits.” Deal B%k, New York Times, May 2

“…at a time when it is raking in record profits” is the operative phrase. Dimon’s record of working the system for what he wants has come back to haunt him. If he’s seen by enough investors as a threat rather than a stimulus to those profits, his time is short. Fortune (May 7) is already talking about potentialDimon replacements.

Dimon and the rest of the Wall Street manipulators at the big banks should have all been fired, investigated, and prosecuted for the wholesale theft of trillions of dollars in wealth from the citizens of this country; for putting profit over the law; profit over reasonable anticipation of punishment for shady practices; and for being so utterly inept that their grand plans ruined the economy.

Politicians and other bloviators make a big deal about consequences and individual responsibility. Well, the Wall Street crew is responsible for highway robbery in broad daylight.